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Last Issues Loom In U.S.-Singapore Free-Trade Pact

WASHINGTON — Trade officials hope to wrap up negotiations this week on a U.S.-Singapore Free Trade Agreement, but several contentious issues, including textile and apparel rules of origin and U.S. Customs Service provisions, must first be...

WASHINGTON — Trade officials hope to wrap up negotiations this week on a U.S.-Singapore Free Trade Agreement, but several contentious issues, including textile and apparel rules of origin and U.S. Customs Service provisions, must first be resolved.

David Spooner, special textile negotiator of the Office of the U.S. Trade Representative, and Jim Leonard, deputy assistant secretary of Commerce for textiles, apparel and consumer goods, are in Singapore this week to attempt to hammer out an agreement on textile and apparel issues.

If an agreement is reached, USTR Robert Zoellick is expected to travel to Singapore and sign the trade deal with Trade Minister George Yeo on Monday, after attending a World Trade Organization meeting in Sydney, Australia on Friday, according to industry sources.

Singapore, however, has yet to agree on a proposed strict rule-of-origin provision for textiles and apparel, according to a Commerce official who requested anonymity. Another outstanding issue is whether Singapore will allow Customs officials to conduct inspections, he said.

The U.S. has proposed a yarn-forward rule-of-origin provision and one that does not allow for tariff preference levels, according to the official. Under this type of rule, apparel must be made of yarn and fabric sourced within the free-trade region in order to be eligible for duty and quota breaks. Tariff preference levels, which the U.S. opposes but Singapore favors, would allow Singapore to use a certain amount of third-country fabric in its apparel production.

U.S. officials were still standing their ground Tuesday in opposition to the TPLs.

“We’re not negotiating to accommodate third countries,” the Commerce official said. “This agreement is between the U.S. and Singapore, not third countries, in our view.”

The U.S. proposal on rules of origin mirrors the position of the American Textile Manufacturers Institute, which submitted its position to the USTR in May.

“The record shows that the [NAFTA] TPLs, rather than being used to produce goods with inputs not available in North America, are being used to produce goods with inputs [primarily fabric from Asian sources], which are freely available in North America,” said Carlos Moore, ATMI’s executive vice president, in the written testimony. “This perversion of the spirit and intent of an FTA must not be repeated.”

On the opposite side of the debate, importers claim time and distance would render the trade pact useless if apparel must be made of yarn and fabric sourced within the free-trade area, which in this case means either in Singapore or the U.S.

Singapore does not have a well-developed textile industry and would be forced to import yarn and fabric from the U.S. under the current proposal.

“If the rules of origin are so strict, there would be no commercial relevance from the free-trade agreement for importers and retailers,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “We think that it would be the wrong way to go to eliminate one sector from any benefits, particularly when Singapore has an open market to U.S. exports.”

Singapore does not impose duties or quotas on U.S. apparel and textile imports. It is a small supplier of apparel and textiles to the U.S., which prompted the Commerce official to question why the rules of origin are even an issue.

“We’re not sure why they need to make such a fuss about it,” the official said.

Although Singapore accounted for only 0.19 percent of all apparel and textiles imported into the U.S. in the first eight months of the year, it remains an important supplier of certain higher-priced items, such as cotton knit tops and cotton shorts and trousers. For the year ending Aug. 31, textile and apparel imports dropped about 15 percent to 67.26 million square meters equivalent. In terms of value, imports from Singapore dropped 13 percent to $284.18 million, according to Commerce.